Don’t Be a Victim: How to Spot Business Fraud Before It Happens to You

January 21, 2019

It’s easy to think of business owners who are victims of business fraud as naive or clueless. After all, who would be so gullible as to fall for a scam? However, business fraud can happen to both big and small companies. Many scammers make a living taking advantage of small businesses like yours, so protecting yourself is essential. How can you spot business fraud before it devastates your bottom line?

The Danger of Business Fraud

Other than potentially exposing customer and employee data, which is a serious situation in and of itself, businesses who fall prey to fraud almost never recoup the lost money. Even excellent, experienced collection agencies face almost impossible odds when attempting to collect from a nonexistent business. After all, if the only information you have about a business is false or faked, how can you track the scammer? The good news is that business fraud can be prevented.

Preventing Business Fraud

Whenever you get a new client, you should always exercise minimal caution and complete basic research. Scammers who do this for a living are charismatic and know how to manipulate business owners into giving them what they want. However, you should always take your time and think carefully and objectively. When researching a new potential client, here are a few things you can consider:

  • What printed materials can the company provide?
  • What does the company’s online presence look like? If a company email address is or, it’s a sign you might be getting scammed. You should also check their URL. If the website was created using a free service like Squarespace or Weebly, you should also exercise caution.
  • Do they have references? Get information about them and use the contact information on that company’s website to get in touch. Some businesses will use the name of a legitimate company but have contact information leading to a conspirator in order to trick businesses.
  • Can you call the phone number provided? The lack of a phone number on their website and collateral is a big red flag. Search the phone number online and see what pops up. When calling the number, be wary if the phone isn’t answered in a professional manner, the voicemail system lacks any identifying information or the number leads to a single individual.
  • Is the provided address a legitimate business address? Use Google Satellite View to see what type of building is standing at the location. If the building doesn’t match the type of business, the street signs have another company name or the location is a home, you should be cautious. You should also be incredibly wary if the address is at a UPS or FedEx store. Many business fraud cases have mailbox services or executive suites as their primary address.
  • What about their credit report? Credit reports are a great investment and cost far less than the money you could potentially lose from a bad client.
  • Finally, you should use your common sense. If a client or order feels too good to be true, there’s a good chance that they are. If you feel pressured to accelerate or skip your due diligence for a great offer, it’s a good sign the offer might not be legitimate.

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